Oil firms make windfall profits, cause HSD shortage.

Byline: Khaleeq Kiani

ISLAMABAD -- At the peak of wheat harvesting season, the supply chain of major petroleum products, particularly high speed diesel (HSD), has been seriously affected in many parts of the country as oil marketing companies (OMCs) allegedly played tricks for monetary gains on the basis of increase in tax rates on petroleum products as approved by the government on April 30.

Sources said on Sunday that some parts of Khyber Pakhtunkhwa, Azad Kashmir, northern parts of the country and some areas in Punjab and Sindh faced shortages at petrol stations on the first three days of May as sales pressure increased due to reduction in oil prices, relaxation in lockdown measures and higher demand in the agriculture sector for threshing.

The problem was compounded by low stocks kept by the OMCs at retail outlets in view of the imminent price reduction for May and leak of information from official channels that the government planned to increase petroleum levy, according to the sources.

Officials from the directorate general of oil and petroleum division also reportedly tinkered with the schedule of import orders and favoured their favourite companies in allowing 'appropriate berthing of vessels'. As this was happening, the senior officials concerned and their political bosses were found wanting in keeping an eye on the emerging situation.

PSO calls for action against the OMCs that did not meet the mandatory stocks cover

Explaining the problem, an official said some oil companies offloaded their vessels on the last few days of April and paid petroleum levy at the applicable rate of Rs15.49 and Rs17.26 per litre on HSD and petrol, respectively, at the customs clearance point. However, they did not shift their products to their retail points and kept them stored in the white oil pipeline or their depots.

As a consequence, they were able to sell their products in May when the government increased petroleum levy to Rs30 and Rs24 per litre on HSD and petrol, thus earning a windfall of Rs14.5 and Rs7 per litre on the two products. This way they were able to make close to a billion rupees in a matter of days.

However, that was not all. Some companies purchased the products abroad in the last few days, when global prices had crashed to $15 per barrel, but they were entitled to much higher sales price calculated on the basis of the relatively higher price of PSO on its imports in earlier weeks at around $19-20 per barrel. Another windfall of...